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3 years ago

6

Finch Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $43. V

ariable costs Manufacturing $ 17 per unit Selling 7 per unit Fixed costs Manufacturing $ 160,000 per year Selling and administrative $ 81,300 per year Required Use the per-unit contribution margin approach to determine the break-even point in units and dollars. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain a profit of $121,600. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 21,500 units, how much could it pay in salaries for salespeople and still have a profit of $121,600? (Hint: Use the equation method.)

1 answer:

ioda3 years ago

7 0

Answer:

a) Break even in units= 12, 684 units; Break even in dollars= 547,727.27

b) Break even in units= 19,052 units; Break even in dollars= $822,727.27

c) The salaries to pay to get a profit of $121,600 is $196,400

Explanation:

Solution to A) Compute the Contribution Margin per unit and use it to calculate the break -even point

1. Per unit Contribution Margin is calculated as the

Price- Variable Cost (Manufacturing and Selling)

=$43- $17-$7

= $19

Based on this calculation, then calculate the Contribution Margin Ratio

= Contribution/Sales

= $19/$43 = 0.44 or 44%

2. Next step, calculate total fixed cost as follows:

Total fixed cost = Manufacturing + Administrative Fixed costs)

= $160,000 + $81,000

= $241,000

Now, calculate the Break Even in Units =

The total fixed cost/ Contribution Margin

= $241,000/$19

= 12, 684 units

Now, calculate the Break even in dollars=

Total fixed cost/ Contribution margin ratio

= $241,000/0.44

= $547,727.27

Solution B: Using the Contribution per unit Contribution Margin, determine Sales level in Units and dollars required for a profit of $121,600

What is the desired profit $121,600

The total fixed cost <u> $241,000</u>

Total amount is $362,000

Therefore, calculate the Break Even in Units using the new total fixed cost

= $362,000/$19= 19,052 units

Also, Calculate the Break even in dollars

= $362,000/ 0.44= $822,727.27

Solution C: Calculate salaries for salespeople to sell 21,500 units and make a profit of $121,600

We can start with an equation assumption as follows:

Let the required fixed cost be as follows:

The total fixed cost in solution 1 + X( the additional fixed cost required).

Therefore, the target profit

= Target Profit= Units to sell x (price- variable manufacturing cost) - the total fixed cost

= $121,600= 21,500 units x (43-17) - $241,000+ x

= $121,600= (21,500 x 26)- (241,000+ x)

=$121,600= 559,000- 241,000 -x

x= 559,000-241,000-121,600

x= $196,400

The salaries to pay to get a profit of $121,600 is $196,400

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Answer:

The answer is C.

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3 years ago

The Bears Corporation has provided you the following information:Increase in accounts receivable balance 50,000 Net sales 500,00

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Answer:

A. cash collected is 442,500

B. Cash paid to suppliers is 62,000

Explanation:

A. To determine the cash collected for the period, the account that we should analyze is the accounts receivable.

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Less: Increase in accounts receivable 50,000

Less: write off 7,500

total collection 442,500

*increase in accounts receivable means lesser amount of collection than the sale on account

*write off will decrease the accounts receivable which means, it affects the cash collection computation.

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4 years ago

Assume you have noted the following prices for books and the number of pages that each book contains.Book Pages (x) Price (y)A 5

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$a) $y=0.00991 x+1.042$b) $r^2=0.7503^2=0.563$\\C) $r=\frac{7(30095)-(4210)(49)}{\sqrt{\left[7(2595100)-(4210)^2\right]\left[7(354)-(49)^2\right]}}=0.7503$$

x: 500, 700, 750, 590 , 540, 650, 480

y: 7.00, 7.50 , 9.00, 6.5, 7.50 , 7.0, 4.50

We want to create a linear model like this :

$y=m x+b$

Where

$m=\frac{S_{x y}}{S_{x x}}$

And:

$\begin{aligned}& S_{x y}=\sum_{i=1}^n x_i y_i-\frac{\left(\sum_{i=1}^n x_i\right)\left(\sum_{i=1}^n y_i\right)}{n} \\& S_{x x}=\sum_{i=1}^n x_i^2-\frac{\left(\sum_{i=1}^n x_i\right)^2}{n}\end{aligned}$

With these we can find the sums:

$\begin{aligned}& S_{x x}=\sum_{i=1}^n x_i^2-\frac{\left(\sum_{i=1}^n x_i\right)^2}{n}=2595100-\frac{4210^2}{7}=63085.714 \\& S_{x y}=\sum_{i=1}^n x_i y_i-\frac{\left(\sum_{i=1}^n x_i\right)\left(\sum_{i=1}^n y_i\right) n}{=} 30095-\frac{4210 * 49}{7}=625\end{aligned}$

And the slope would be:

$m=\frac{625}{63085.714}=0.00991$

Now we can find the means for x and y like this:

$\begin{aligned}& \bar{x}=\frac{\sum x_i}{n}=\frac{4210}{7}=601.429 \\& \bar{y}=\frac{\sum y_i}{n}=\frac{49}{7}=7\end{aligned}$

And we can find the intercept using this:

$b=\bar{y}-m \bar{x}=7-(0.00991 * 601.429)=1.042$

And the line would be:

$y=0.00991 x+1.042$

Part b

The correlation coefficient is given by:

$r=\frac{n\left(\sum x y\right)-\left(\sum x\right)\left(\sum y\right)}{\sqrt{\left[n \sum x^2-\left(\sum x\right)^2\right]\left[n \sum y^2-\left(\sum y\right)^2\right]}}$

For our case we have this:

$\begin{aligned}& \mathrm{n}=7 \sum x=4210, \sum y=49, \sum x y=30095, \sum x^2=2595100, \sum y^2=354 \\& r=\frac{7(30095)-(4210)(49)}{\sqrt{\left[7(2595100)-(4210)^2\right]\left[7(354)-(49)^2\right]}}=0.7503\end{aligned}$

The determination coefficient is given by:

$r^2=0.7503^2=0.563$

Part c

$r=\frac{7(30095)-(4210)(49)}{\sqrt{\left[7(2595100)-(4210)^2\right]\left[7(354)-(49)^2\right]}}=0.7503$

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1 year ago

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Answer:

Therefore after 16.26 unit of time, both accounts have same balance.

The both account have $8,834.43.

Explanation:

Formula for continuous compounding :

$P(t)=P_0e^{rt}$

P(t)= value after t time

$P_0$ = Initial principal

r= rate of interest annually

t=length of time.

Given that, someone invested $5,000 at an interest 3.5% and another one invested $5,250 at an interest 3.2% .

Let after t year the both accounts have same balance.

For the first case,

P= $5,000, r=3.5%=0.035

$P(t)=5000e^{0.035t}$

For the second case,

P= $5,250, r=3.5%=0.032

$P(t)=5250e^{0.032t}$

According to the problem,

$5000e^{0.035t}=5250e^{0.032t}$

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$\Rightarrow 0.003t}=ln(\frac{21}{20})$

$\Rightarrow t}=\frac{ln(\frac{21}{20})}{0.003}$

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Therefore after 16.26 unit of time, both accounts have same balance.

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3 years ago

Bernie Company sells buttons to fabric stores. Sales are expected to be $2,046,299 in January, $2,484,001 in February and $3,162

Igoryamba

Answer:

$1,701,371

Explanation:

Gross Profit = Sales - Cost of Sales

therefore,

In percentage this equation can be expressed according to the Company policy as :

<em>46 % = 146 % - 100%</em>

Cost of Sales = 100/146 x $2,484,001 = $1,701,371

Conclusion :

Budgeted cost of goods sold for February is $1,701,371

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3 years ago